Navigating a divorce can prove to be quite challenging especially when severing complex financial ties. If you are in the process of a divorce and are wondering how to separate your finances, it is helpful to have an idea about what to expect. Whether you need to consolidate debt after a divorce or you are wondering about consolidating prior, understanding the facts involved can aid you in making an informed decision for your financial future.
Handling Joint Accounts
If you have accounts that are in both you and your divorcee?s name, it is best to take care of the account prior to the divorce. As long as your name is on the loan, you will be legally obligated to repay the debt. Some of the loans commonly shared in a marriage include joint credit card accounts, car titles, mortgages, and other personal property such as boats and RVs. Handling each debt separately prior to finalizing the divorce is the most optimal and simplistic method for handling finances during a divorce proceeding.
Liquefying a Mortgage
A mortgage in both names is considered as joint debt with both parties liable for the debt. Since this debt is secured, it can not be consolidated into a traditional debt consolidation loan. One solution many divorcees select is selling the home and splitting the funds garnered from the sale of the home. As a benefit of taking this route, monies derived from the sale can be directed towards paying off joint credit card debt that is owned by both parties.
Handling a Joint Car Title
A car is often shared by both spouses and during a divorce, it can be difficult to decide who gets to keep the vehicle. In a contested divorce, the judge will likely determine who is allowed to keep the automobile. However in the case of an uncontested divorce both parties can amicably agree on a viable solution. One option most divorcing couples select is to have the individual who will be keeping the car refinance the loan in their name. This ensures that all subsequent debt associated with the vehicle will be in the name of the one who is using the car. Another option is to sell the car and split the funds evenly between both people.
Debt Consolidation
For debt consolidation to occur, both parties must already be divorced with each loan in one person?s name. After the divorce has been finalized each party can consolidate their remaining debt on their own as an effective debt management strategy. Since a debt consolidation involves acquiring a new loan to pay off unsecured debt, it is not feasible to perform a debt consolidation with both spouses prior to the divorce.
Understanding the options available when dissolving joint loans can help each individual in planning their finances for a positive outcome.
Articles on www.debtplan.org have been acquired from a variety of sources.? No content on this site should be considered financial or legal advice
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- Finances and Divorce
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- Debt Consolidation Of Credit Cards
- What is Debt Consolidation?
Source: http://www.debtplan.org/blog/debt-consolidation-and-divorce-understanding-the-facts.html
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